Management

1
Management

• Chapter 7
• Information and Decision Making

2
Planning Ahead

• How is information technology changing the
  workplace?
• What in the role of information in the management
  process?
• How do managers use information to make
  decisions?
• What are the steps in the decision-making
  process?
• What are the current issues in managerial
  decision making?

3
How is information technology changing the
workplace?

• Information and knowledge basic linkages
• Knowledge and knowledge workers provide a
  decisive competitive factor in todays economy.
• Knowledge worker.
• Someone whose value to the organization rests
  with intellect, not physical capabilities.
• Intellectual capital.
• Shared knowledge of a workforce that can be used
  to create wealth.

4
How is information technology changing the
workplace?

• Information and knowledge basic linkages
  (cont.)
• Knowledge and intellectual capital are
  irreplaceable organizational resources.
• The productivity of knowledge and knowledge
  workers depends on
• Computer competency.
• Information competency.

5
How is information technology changing the
workplace?

• Electronic commerce.
• The process of buying and selling goods and
  services electronically through use of the
  Internet.
• B2C e-commerce.
• B2B e-commerce.
• Stages of development in e-commerce
• Secure an online identity.
• Establish a Web presence.
• Enable e-commerce.
• Provide e-commerce and customer relationship
  management.
• Utilize a service application model.

6
How is information technology changing the
workplace?

• Implications of IT within organizations
• Facilitation of communication and information
  sharing.
• Operating with fewer middle managers.
• Flattening of organizational structures.
• Faster decision making.
• Increased coordination and control.

7
How is information technology changing the
workplace?

• Implications of IT for relationships with
  external environment
• Helps with customer relationship management.
• Helps organizations with supply chain management.
• Helps in monitoring outsourcing and other
  business contracts.

8
How is information technology changing the
workplace?

• How IT is changing the office
• Progressive organizations actively use IT to help
  achieve high performance in uncertain
  environments.
• IT has dramatically changed nature of offices.
• Key developments in networked offices
• Instant messaging.
• Peer-to-peer file sharing (P2P).

9
What is the role of information in the management
process?

• What is useful information?
• Data.
• Raw facts and observations.
• Information.
• Data made useful for decision making.
• Information drives management functions.
• Characteristics of useful information
• Timely.
• High quality.
• Complete.
• Relevant.
• Understandable.

10
What is the role of information in the management
process?

• Information needs of organizations.
• Information exchanges with the external
  environment
• Gather intelligence information
• Provide public information
• Information exchanges within the organization
• Facilitate decision making.
• Facilitate problem solving.

11
What is the role of information in the management
process?

• Basic information system concepts
• Information system.
• Use of the latest IT to collect, organize, and
  distribute data for use in decision making.
• Management information system (MIS).
• Specifically designed to meet the information
  needs of managers in daily decision making.

12
What is the role of information in the management
process?

• Basic information system concepts (cont.)
• Decision support system (DSS).
• An interactive information system that allows
  users to organize and analyze data for solving
  complex and sometimes unstructured problems.
• Group decision support system (GDSS) facilitates
  group efforts to solve complex and unstructured
  problems.
• GDSSs use groupware.

13
What is the role of information in the management
process?

• Basic information system concepts (cont.)
• Artificial intelligence (AI)
• Computer systems with the capacity to reason the
  way people do.
• Expert systems (ES).
• Software systems that use AI to mimic the
  thinking of human experts.

14
What is the role of information in the management
process?

• Basic information system concepts (cont.)
• Intranets and corporate portals.
• Allow employees, by password access, to share
  databases and communicate electronically.
• Extranets and enterprise portals.
• Allow communication and data sharing between the
  organization and the external environment.
• Electronic data interchange (EDI).
• Uses controlled access to enterprise portals and
  supporting software to enable electronic
  transactions between businesses.

15
What is the role of information in the management
process?

• Managerial advantages of IT utilization
• Planning advantages.
• Better and more timely access to useful
  information.
• Involving more people in planning.
• Organizing advantages.
• More ongoing and informed communication among all
  parts of the organization.
• Improved coordination and integration.

16
What is the role of information in the management
process?

• Managerial advantages of IT utilization (cont.)
• Leading advantages.
• Improved communication with staff and
  stakeholders.
• Keeping objectives clear.
• Controlling advantages.
• More immediate measures of performance results.
• Allows real-time solutions to performance
  problems.

17
How do managers use information to make decisions?

• A performance deficiency is
• Actual performance being less than desired
  performance.
• A performance opportunity is
• Actual performance being better than desired
  performance.
• Problem solving is
• The process of identifying a discrepancy between
  actual and desired performance and taking action
  to resolve it.
• A decision is
• A choice among possible alternative course of
  action.

18
How do managers use information to make decisions?

• Programmed decisions.
• Apply solutions that are readily available from
  past experiences to solve structured problems.
• Structured problems are ones that are familiar,
  straightforward, and clear with respect to
  information needs.
• Best applied to routine problems that can be
  anticipated.

19
How do managers use information to make decisions?

• Nonprogrammed decisions.
• Develop novel solutions to meet the demands of
  unique situation that present unstructured
  problems.
• Unstructured problems are ones that are full of
  ambiguities and information deficiencies.
• Commonly faced by higher-level management.

20
How do managers use information to make decisions?

• Crisis decision making.
• A crisis involves an unexpected problem that can
  lead to disaster if not resolved quickly and
  appropriately.
• Rules for crisis management
• Figure out what is going on.
• Remember that speed matters.
• Remember that slow counts, too.
• Respect the danger of the unfamiliar.
• Value the skeptic.
• Be ready to fight fire with fire.

21
How do managers use information to make decisions?

• Decision environments
• Certain environments.
• Offer complete information about possible action
  alternatives and their outcomes.
• Risk environments.
• Lack complete information about action
  alternatives and their consequences, but offer
  some estimates of probabilities of outcomes for
  possible action alternatives.
• Uncertain environments
• Information is so poor that probabilities cannot
  be assigned to likely outcomes of known action
  alternatives.

22
How do managers use information to make decisions?

• Problem-solving approaches or styles
• Problem avoiders.
• Inactive in information gathering and solving
  problems.
• Problem solvers.
• Reactive in gathering information and solving
  problems.
• Problem seekers.
• Proactive in anticipating problems and
  opportunities and taking appropriate action to
  gain an advantage.

23
How do managers use information to make decisions?

• Systematic versus intuitive thinking.
• Systematic thinking approaches problems in a
  rational, step-by-step, and analytical fashion.
• Intuitive thinking approaches problems in a
  flexible and spontaneous fashion.
• Multidimensional thinking applies both intuitive
  and systematic thinking.
• Effective multidimensional thinking requires
  skill at strategic opportunism.

24
What are the steps in the decision-making process?

• Five-step decision-making process
• Identify and define the problem.
• Generate and evaluate possible solutions.
• Choose a preferred course of action and conduct
  the ethics double check.
• Implement the decision.
• Evaluate results.

25
What are the steps in the decision-making process?

• Step 1 identify and define the problem.
• Focuses on information gathering, information
  processing, and deliberation.
• Decision objectives should be established.
• Common mistakes in defining problems
• Defining the problem too broadly or too narrowly.
• Focusing on symptoms instead of causes.
• Choosing the wrong problem.

26
What are the steps in the decision-making process?

• Step 2 generate and evaluate possible
  solutions.
• Potential solutions are formulated and more
  information is gathered, data are analyzed , the
  advantages and disadvantages of alternative
  solutions are identified
• Approaches for evaluating alternatives
• Stakeholder analysis.
• Cost-benefit analysis.

27
What are the steps in the decision-making process?

• Step 2 generate and evaluate possible solutions
  (cont.).
• Criteria for evaluating alternatives
• Benefits.
• Costs.
• Timeliness.
• Acceptability.
• Ethical soundness.
• Common mistakes
• Selecting a particular solution too quickly.
• Choosing a convenient alternative that may have
  damaging side effects or may not be as good as
  other alternatives.

28
What are the steps in the decision-making process?

• Step 3 decide on a preferred course of action.
• Classical decision model.
• Managers act rationally in a certain world.
• Managers face clearly defined problems and have
  complete knowledge of all possible alternatives
  and their consequences.
• Results in an optimizing decision.

29
What are the steps in the decision-making process?

• Step 3 decide on a preferred course of action
  (cont.).
• Behavioral decision model
• Managers act in terms of what they perceive about
  a given situation.
• Recognizes limits to human information-processing
  capabilities.
• Cognitive limitations.
• Bounded rationality.
• Results in a satisficing decision.

30
What are the steps in the decision-making process?

• Step 4 implement the decision solution.
• Involves taking action to make sure the solution
  decided upon becomes a reality.
• Managers need to have willingness and ability to
  implement action plans.
• Lack-of-participation error should be avoided.

31
What are the steps in the decision-making process?

• Step 5 evaluate results.
• Involves comparing actual and desired results.
• Positive and negative consequences of chosen
  course of action should be examined.
• If actual results fall short of desired results,
  the manager returns to earlier steps in the
  decision-making process.

32
What are the current issues in managerial
decision making?

• Types of heuristics for simplifying decision
  making
• Availability heuristic.
• People use information readily available from
  memory as a basis for assessing a current event
  or situation.
• Representativeness heuristic.
• People assess the likelihood of something
  happening based upon its similarity to a
  stereotyped set of occurrences.
• Anchoring and adjustment heuristic.
• People make decisions based on adjustments to a
  previously existing value or starting point.

33
What are the current issues in managerial
decision making?

• Escalating commitment.
• The tendency to increase effort and apply more
  resources to a course of action that is not
  working.
• Ways to avoid the escalation trap
• Set advance limits and stick to them.
• Make your own decisions.
• Carefully determine why you are continuing a
  course of action.
• Remind yourself of the costs.
• Watch for escalation tendencies.

34
What are the current issues in managerial
decision making?

• Potential advantages of group decision making
• Greater amounts of information, knowledge, and
  expertise are available.
• More action alternatives are considered.
• Increased understanding and acceptance of
  outcomes.
• Increased commitment to implement final plans.

35
What are the current issues in managerial
decision making?

• Potential disadvantages of group decision making
• Pressure to conform.
• Minority domination may occur.
• Decision making takes longer.

36
What are the current issues in managerial
decision making?

• Ethical decision making.
• Any decision should meet ethics double check.
  mentioned in step 3 of the decision-making
  process.
• How would I feel if my family found out about
  this decision?
• How would I feel if this decision were published
  in the local newspaper?
• Any discomfort in answering these questions
  indicates the decision has ethical shortcomings.

37
What are the current issues in managerial
decision making?

• Ethical decision making (cont.).
• Considering the ethics of a proposed decision may
  result in better decisions and prevention of
  costly litigation.
• Ethical decisions satisfy the following criteria
• Utility.
• Rights.
• Justice.
• Caring.

38
What are the current issues in managerial
decision making?

• Knowledge management.
• Processes through which organizations develop,
  organize, and share knowledge to achieve
  competitive advantage.
• Chief Knowledge Officer (CKO)
• Energizes learning processes.
• Manages and enhances organizations intellectual
  assets.
• Knowledge management requires a culture that
  values learning fosters a learning organization.